International Economics: Theory and Policy 12th Global Edition by Paul Krugman test bank

 
21) In 1998 an economic and financial crisis in South Korea caused it to experience
A) a surplus in their balance of payments.
B) a deficit in their balance of payments.
C) a balanced balance of payments.
D) an unbalanced balance of payments.
E) a lull in international trade.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
22) In 1998, countries that ran large trade surpluses include
A) China and South Korea.
B) U.S. and Japan.
C) China and U.S.
D) U.S. and South Korea.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
23) After World War II, the United States has pursued a broad policy of
A) strengthening "Fortress America" protectionism.
B) removing barriers to international trade.
C) isolating Iran and other members of the "axis of evil."
D) protecting the U.S. from the economic impact of oil producers.
E) restricting trade of manufactured goods.
Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
 
24) Cost-benefit analysis of international trade
A) is basically useless.
B) is empirically intractable.
C) focuses attention primarily on conflicts of interest within nations.
D) focuses attention on conflicts of interest between nations.
E) never leads to government intervention in international trade.
Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
 

 
25) An improvement in a country's balance of payments means a decrease in its balance of payments deficit, or an increase in its surplus. In fact, we know that a surplus in a balance of payments
A) is always beneficial.
B) is usually beneficial.
C) is never harmful.
D) is sometimes harmful.
E) is always harmful.
Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
 
26) The GATT is
A) an international agreement.
B) an international U.N. agency.
C) an international IMF agency.
D) a U.S. government agency.
E) a collection of tariffs.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
27) The balance of payments has become a central issue for the United States because
A) when the balance of payments is not balanced, society is unbalanced.
B) the U.S. economy cannot grow when the balance of payments is in deficit.
C) the U.S. has run huge trade deficits in every year since 1982.
D) the U.S. never experienced a surplus in its balance of payments.
E) the U.S. once ran a large trade surplus of about $40 billion.
Answer:  C
Difficulty:  Easy
AACSB:  Application of knowledge
 
28) In September 2010, the finance minister of ________ declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the ________.
A) England; pound sterling
B) Germany; euro
C) Japan; yen
D) China; renminbi
E) Brazil; Real
Answer:  E
Difficulty:  Easy
AACSB:  Application of knowledge
 

 
29) The study of exchange rate determination is a relatively new part of international economics, since
A) for much of the past century, exchange rates were fixed by government action.
B) the calculations required for this were not possible before modern computers became available.
C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
D) dynamic overshooting asset pricing models are a recent theoretical development.
E) the exchange rate never fluctuates.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
30) A fundamental problem in international economics is how to produce
A) a perfect degree of monetary harmony.
B) an acceptable degree of harmony among the international trade policies of different countries.
C) a world government that can harmonize trade and monetary policies.
D) a counter-cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country.
E) a worldwide form of currency.
Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
 
31) For almost 70 years international trade policies have been governed
A) by the World Trade Organization.
B) by the International Monetary Fund.
C) by the World Bank.
D) by an international treaty known as the General Agreement on Tariffs and Trade (GATT).
E) by the North American Free Trade Agreement (NAFTA).